State audit flags $500,000 spent by Freetown nonprofit

Crystal Springs, a Freetown-based nonprofit, state-funded human-services provider, engaged in more than a half-million dollars of questionable and unallowable spending over a two-year period, according to a state audit released today.

Crystal Springs, a Freetown-based nonprofit, state-funded human-services provider, engaged in more than a half-million dollars of questionable and unallowable spending over a two-year period, according to a state audit released today.

Formerly known as the Institute for Developmental Disabilities, Crystal Springs provides special education, therapeutic and residential services to approximately 110 disabled children and adults.

The bulk of the questionable costs — $359,573 of the $538,050 cited in the audit — were for related-party transactions with Thermo Mechanical Systems Corp. without competitive bidding. Thermo Mechanical's chief executive officer and a member of its board of directors were also members of Crystal Springs' board. The relationship was disclosed, but not using a competitive bidding process is contrary to state regulations and leaves unknown whether Crystal Springs obtained the best service at the best price.

Crystal Springs told the state auditor's office that it would implement a new policy to competitively bid any purchase in excess of $2,500, a press release stated.

The audit also recommended that Crystal Springs repay the state for $71,066 in other questionable spending, including:

— $90,922 intended for providing services that was instead used to purchase two agency vans, air-conditioning equipment and flooring supplies.

— $38,792 in pay for an employee who was given “unnecessary” promotions and raises.

— $23,839 in unallowable fringe benefits to certain employees including $11,739 in personal use of agency vehicles and $12,100 in loans.

— $13,200 in rental income that Crystal Springs failed to use to offset the state's cost of operating the program.

“The mission of Crystal Springs and other agencies of this type is vital to the welfare of some of our most vulnerable citizens,” state Auditor Suzanne Bump said. “The services provided have a significant impact on people throughout the state. State resources that fund these programs must be maximized and well-spent in accordance with laws and regulations. This audit highlights some areas that are in need of improvement.”